PDLB

Business Context and Reporting Period

Ponce Financial Group, Inc. (PDLB) filed a Form 8-K on December 20, 2024, reporting the entry into a Material Definitive Agreement with the United States Department of the Treasury. The Company is a Maryland corporation headquartered in the Bronx, New York.

Key Financial Metrics

This filing does not report standard financial performance metrics such as revenue, profit, cash flow, or debt levels. The primary financial instrument discussed is the Senior Non-Cumulative Preferred Stock issued under the Emergency Capital Investment Program (ECIP).

• Preferred Stock Held by Treasury: 225,000 shares.
• Current Dividend Rate: 0.5%.
• Anticipated Purchase Price: Expected to be at a substantial discount from face value, calculated based on present value formulas involving interest rates and equity risk premiums.

Material Changes

The material change reported is the execution of an ECIP Securities Purchase Option Agreement on December 20, 2024. This agreement grants the Company an option to repurchase all 225,000 shares of Preferred Stock currently held by the Treasury during the first fifteen years following the original issuance date of June 7, 2022.

Guidance, Outlook, and Risks

Outlook and Conditions: The Company expects the repurchase price to be significantly below face value. However, the option cannot be exercised until specific "Threshold Conditions" are met. The earliest possible date to meet these conditions is June 30, 2026.

Threshold Conditions: The Company must satisfy one of the following during the ten-year ECIP Period:

1. Deep Impact Condition: Average of at least 60% of Total Originations qualifies as "Deep Impact Lending" over any 16 consecutive quarters.
2. Qualified Lending Condition: Average of at least 85% of Total Originations qualifies as "Qualified Lending" over any 24 consecutive quarters.
3. Dividend Rate Condition: The Preferred Stock dividend rate is no more than 0.5% at each of six consecutive Reset Dates.

Current Status: The Company has met both the Deep Impact and Qualified Lending conditions for 9 consecutive quarters. The current dividend rate is 0.5%. The Company does not currently meet the full Threshold Conditions required to exercise the option.

Risks: There is no assurance that Threshold Conditions will be met. The purchase price calculation depends on external factors like interest rates. The Company must also maintain eligibility as a CDFI or MDI and comply with all legal and regulatory criteria.

Investor Verification Checklist

• Verify the specific definitions of "Deep Impact Lending" and "Qualified Lending" in the ECIP terms to assess the feasibility of meeting the 16-quarter and 24-quarter thresholds.
• Monitor the Company's quarterly originations data to track progress toward the 60% and 85% lending targets.
• Review the "Reset Dates" schedule to determine when the 0.5% dividend rate condition could be satisfied for six consecutive periods.
• Confirm the Company's continued qualification as a Community Development Financial Institution (CDFI) or Minority Depository Institution (MDI).
• Examine the full text of the ECIP Securities Purchase Option Agreement (Exhibit 10.1) for detailed purchase price formulas and additional eligibility requirements.